Using system dynamics for ex-ante impact assessment of food safety policies in pig value chains
Rich, K.M.; Thu Huyen, N.T.; Nam Ha, D.; Duong Nga, N.T.; Xuan, V.K.; Trung, N.X.; Van Long, T.; Van Hung, P.; Unger, F.; Hamza, K.; Lapar, L.
Karl M. Rich, Ph.D. Lab 863 Ltd.
University of New England
Safe Pork conference, Porto, Portugal7-10 September 2015
What is system dynamics?
• “System dynamics is a computer-aided approach to policy analysis and design. It applies to dynamic problems arising in complex social, economic, or ecological systems
• Literally any dynamic systems are characterized by interdependence, mutual interaction, information feedback, and circular causality”
• It provides a methodology for studying complex dynamic systems that include nonlinearities, delays, and feedback loops.
• System dynamics is currently applied in economics, public policy, environmental studies, defense, commodity cycles, management, etc.
Source: System Dynamics Society
Why system dynamics for value chains?
• A major gap in value chain (VC) analysis: understanding the impact of VC investments– The general performance of a chain– The ability to evaluate ex-ante between different
(intervention) options
• Value chain analysis does a very nice job of describing the chain and things that influence it. But it is less good on measurement, e.g. effects of potential interventions (e.g. reduced pathogen loads versus investment)
Why system dynamics for value chains?
• An example: suppose tomorrow you were given US$20 million to improve an existing agricultural value chain
• Given the tools you have so far, could you evaluate how best to use that money?– Where to invest, which node, scope of
investment, how long it may take
Why system dynamics for pig value chains?
• To assess dynamic impacts of interventions over time – Effects on markets– Effects on adoption– Effects on sustainability
• To operationalize value chain analysis as a tool for impact assessment rather than just for diagnostics.
• It provides the ability to use interface as communication platform for dissemination.
SD concepts
• Stocks (accumulation)• Flows (change overtime – rate/time unit)• Feedback loops (circular causality)• Delays
A generic value chain
Source: Rich, Rich, and Hamza (2015)
A generic agricultural value chain
A generic value chain
Source: Rich, Rich, and Hamza (2015)
A generic agricultural value chain, with different interventions to be simulated ex-ante
Diagrammatic structure of the pig value chain: green are market dynamics, pink are intervention possibilities
Production module
Production moduleAge cohorts, separated by region and production system
Production module
Sales channels for pigs
Production module
Interventions to reduce death rate at farm level (these add costs also – not shown here)
Demand
Demand
Productivity effect from healthier pigs
Demand
Productivity effect from healthier pigs
Income effects on consumers: healthier consumers spend more on all goods, including pork
Demand
Productivity effect from healthier pigs
Income effects on consumers: healthier consumers spend more on all goods, including pork
But interventions come at higher compliance costs at slaughterhouse – higher prices
Demand
Productivity effect from healthier pigs
Income effects on consumers: healthier consumers spend more on all goods, including pork
But interventions come at higher compliance costs at slaughterhouse – higher prices
What are the tradeoffs between the benefits of interventions and their costs over time, taking into account market adjustments?
Model interface in iThink
Model interface in iThink: baseline
Death rate reduction % increase in pig weight
Weeks for intervention Additional weekly costs at farm
level
% increase in slaughterhouse margin
% increase in income from better health
% increase in income
Model interface in iThink: sample scenario
% increase in slaughterhouse margin% increase in pig weightDeath rate reduction
Weeks for intervention Additional weekly costs at farm
level % increase in income from better health
% increase in income
Where are we so far?
• Baseline model parameterized in iThink based on value chain survey
• Validation of data in process – a few data inconsistencies to be resolved
What do we need?
• Definition of intervention options – critical need
• Costs: relatively straightforward
• Benefits: more difficult translating technical impacts into economic terms– Effects of disease reduction into production
gains?– Effects of pathogen reduction into health gains?
Point from Outline
text
Thank you!
Acknowledgement:• CRP L & F• ACIAR, PigRISK• VNUA• HSPH
